We are hopeful that a report commissioned by the New Mexico Legislature and filed last week will give lawmakers the information they need to begin the process of making long-overdue reforms to our state’s tax policy.

The report was authored by the private accounting firm Ernst & Young with help from George State University. Along with analyzing our current tax system in comparison to other states, it also developed Excel-based models to evaluate the impact of proposed reforms.

New Mexico is one of only six states in the nation that levy a gross receipts tax, which is paid by the business, as opposed to a standard sales tax, which is paid by the purchaser. The GRT disadvantages small businesses, and those that are just getting started, the report found. That’s because they often end up having a tax liability even in years when they are not profitable. Other states with a GRT have made corrections for that, and New Mexico hasn’t, the report said.

Another difference with the five other states that have a GRT is they tend to have few exemptions and deductions, and a low rate, the study found. New Mexico’s GRT has many exemptions and deductions, and a higher overall rate.

Over the years, lawmakers have passed numerous tax exemptions designed to give specific sectors of the economy a boost. Each of these moves have been well-intentioned, and many did have the desired effect. For example, the decision by Union Pacific to move its rail hub from El Paso to Santa Teresa was dependent on a fuel tax exemption.

But there has been no accounting for or coordination of all those tax credits. We don’t know which ones have been effective, and which ones are mere giveaways. But we do know that the overall impact of all the credits combined has resulted in a significant reduction to state revenue.

Revenue from GRT grew at a slower rate than the state’s gross domestic product in the 18 years between 1998 and 2016, the report found, demonstrating the negative impact all of the tax exemptions have had on our tax base.

It has been difficult for the state to even consider changes to the tax code in recent years because of the drop in state revenue caused primarily by lower oil and gas prices, and the unwillingness of Gov. Susana Martinez to consider any proposals that could be seen as a tax increase.

When the Legislature meets in January, 2019 there will be a new governor in office. And, a rebound in oil and gas prices has meant increased revenue for the state. Those two factors should make it easier forlawmakers to consider tax reform next year when they meet for a 60-day session.

Not to suggest that tax reform is ever easy under any circumstances.

We don’t see consensus for radical changes this year, but we do hope lawmakers begin the process of bringing more stability to the tax base and more accountability for all those tax breaks.